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Net work Analysis (or Location Analysis) What is a network?

Location of facilities and routes or links What is network analysis? Study of the locations & links for minimizing logistical costs and or maximizing customer service
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Some salient features of network design

(What decisions are taken in network design?)


1. Number of facilities [factories and warehouses]

2. Their locations
3. Communication systems

4. Activities performed in these facilities, what


item (SKU)? Storage? Break bulk?
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1. Type of the facility (Who should operate these

facilities?)
2. Size of the facility, how big?

Factors to be considered in deciding the size 1. Fixed as against random access storage 2. Horizontal versus high rise layout 3. Order picking (large inventory) versus stock replenishment (small inventory) activities 4. Multi-dock versus single dock layout

5. Aisle space? Rack space?

6. Labor intensive or high tech operations,


carousals? Robotics?

7. Amount of cross docking

Importance of network analysis & design Decisions of N/W Analysis are taken to ensure 1. Prompt response to market dynamics What are market dynamics?

Changing customer service requirements - shorter lead times? Lower costs?

Shrinking supplier base

Changing customers
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Shifting locations of customer


new locations of supply market

Change in corporate policies (dropping of


products or product variety)

2. To reduce Cost of moving the product to


customer

Network options in the network

DESIGN OPTIONS FOR A TRANSPORTATION NETWORK

Retail stores Supplier Supplie rs Retail stores Retail stores supplier

DIRECT SHIPMENT

DIRECT SHIPMENT WITH MILK RUNS

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DESIGN OPTIONS FOR A TRANSPORTATION NETWORK


Supplier Retail stores

ALL SHIPMENT S VIA DC Retail stores Supplier

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MILK RUNS FROM DC

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Amount of transshipment
Number of locations and volume of inventory

The square root law X2 =[X1] [n2/n1] X1 = total inventory in existing facilities X2 = total inventory in future facilities
n1 = number of existing facilities [warehouses]

n2 = number of future facilities [warehouses]


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Number of facilities, How many?

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Location of facilities
Some models for facility location

Gravity model
Analytical models

Ton-mile center

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Who operates these facilities? - outsourcing


decisions

Communication between these facilities,


information and inventory

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3. To vitalize Customer service

Response time Lead-time Response to competitive action


5. To accommodate corporate organizational changes such as down sizing reengineering globalization
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Milk run

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Roll On/Roll Off ferries [RORO]: the truck rolls on to the and rolls off at the end of the voyage

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Roll On/Roll Off ferries


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LASH [Lighters Aboard a SHip]: when a ship is


loaded on the high seas from barges, instead of

loading the cargo lifted from the barge, entire


barge is lifted and loaded on the ship. At the end

of the voyage barge is put back on water

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LASH
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